Democracy Alert

Truth & Transparency = A Stronger Democracy

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Understanding Hedge Funds

All investors are looking for the most time efficient ways to make the most money. For those individuals who have a bit of extra money to spend, hedge funds may be just the way to make money fast.

The establishment of hedge funds date back to the late 1940s and were developed by Alfred Jones who was the father of unorthodox investment techniques.

One of his most successful techniques was selling short stocks while buying long stocks. This is the basis for how a hedge fund operates. Due to the number of guidelines associated with Hedge Funds it requires much more money then normal stock vehicles.

Hedge Funds guide investors in making a profit in high risk investments. Hedge Funds use technique called leverage. This is when the capital from a company's investors is combined with borrowed money from a bank.

The fee associated with Hedge Funds is called a incentive fee. This is a fee based on a portion, instead of a percentage, of the clients profits. The fee is actually re-invested in hopes of making the company even more money.

For the most part companies own Hedge Funds. Most people do not have enough money to meet the minimum initial investment to have their own Hedge Fund. In 2004 alone Hedge Fund investments passed one trillion dollars. By the middle of 2004, 39 companies held 1.1 trillion dollars in their Hedge Fund.

Making a profit from a Hedge Fund is all about the timing. The best time to invest in a Hedge Fund is when a company that owns one is merging with another company.

If you know a merger is going to take place, buy a large amount of shares in the company that is going to merge. Once the merge takes place the values in these stocks increase dramatically.

This is an extremely high risk investment because mergers that are often rumored to happen never do. The activities of companies are often unpredictable.

Selling short is another great way to turn a profit on merging companies. This takes advantage of the difference between present market price and the high purchase price in the event that mergers does take place.

Hedge Funds are extremely beneficial because of their level of security. Hedge Funds that belong to companies are kept private. This type of investment takes place between a company and individual - the government and other companies are not involved.

Hedge Funds do not need to file with the SEC and are usually based in place that have less regulations like the Cayman or Virgin Islands. Due to the secrecy Hedge Funds are often believed to be illegal and unethical.

However, this is simply not true. Hedge Funds are a legal way to make a great profit. Remember investing in Hedge Funds takes a great deal of money and it is an extremely risky investments. However, the immense pay off can change your life forever, and certainly it is a risk that many people are willing to take to be financial secure.

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Jesse Livermore – Wall Street’s Greatest Bear

Jesse Livermore has almost been forgotten today except by the stock market community. However, in his heyday, the 1920s he was the most feared speculator on Wall Street. Jesse Livermore is still regarded today by many market historians as the greatest speculator of all time.

He was born in 1877 and started his career by making a killing on every type of stock and commodity that traded. He made his first fortune in 1906 by shorting the Union Pacific railroad, which had been severely damaged by the San Francisco earthquake. He became famous as the boy plunger of Wall Street. Despite his great talent he declared bankruptcy four times in his long career. After each bankruptcy, fellow investors would grub stake him for his new assaults on the market.

His greatest triumph was in 1929 when his bear market raids, in the minds of many, broke the stock market and made him a fortune of $ 100 million, a staggering sum in those days. But, after that it was all down hill. In 1940 his once great fortune gone and facing a fifth bankruptcy, he blew his brains out in an exclusive New York nightclub.

In his suicide letter he stated that he no longer knew what worked. Since his death no momentum player or trend chaser has arrived to pick up his mantle because the momentum thesis in the long run takes back from you all that it has given you and more.

In a strange way I have a close personal relationship with Jesse. You see I compete with him every day on Amazon.com. My book competes with Jesse's book which is called " Reminiscences Of A Stock Market Operator." It was ghost written by Edwin Lefevre in 1923. Since that date it has sold and sold and sold. I don't think it has ever been out of print. It is among the top three investment books of all time.

The other two top sellers are "How I Made Two Million Dollars In The Stock Market" and "The Intelligent Investor." It currently ranks 1,762 on Amazon.com and has 212 customer reviews. Now unless you are an author that is not going to sound very impressive to you. Trust me it is very impressive. Amazon.com tracks about six million books. As hard as this is to believe it is a triumph to rank in the top 100,000. If you rank 100,000 you are selling about 35-45 books a month. IF your royalty is say $ 4.00 you are making about $ 1,800-$ 2,000 a year. If you rank 5,000 you are selling about 450 to 600 books a month or say about $ 24,000-$ 28,000 a year. At 2,000 and below you can easily afford an around the world cruise every year.

My goal is to beat Jesse Livermore. Up to now I haven't come close.

Fred Carch is the author of Forty Years A Speculator. His blog is http://www.fortyyearsaspeculator.blogspot.com

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GOP and Trump Take Another Step Towards Dictatorship and Against Democracy

In a furtive dead of the night type attack against US Democracy the House G.O.P. Votes to Gut an Office Reviewing Ethics. This was done suddenly, without any public debate. Why? Because the stink from the GOP action would alert the public to the GOP's cynical move in its own self interest. Make no mistake about this. It was not done for any other reason than to prevent the office from doing what it was tasked to do - Investigate ethics charges against house members.

It is especially highly hypocritical for the GOP and Trump who voted on a promise to "Drain the Swamp" in Washington that Trump said were filled with bankers, Wall Street, and lobbyists. What we are finding out is that Trunp and the GOP are not interested in draining the swamp to reduce banker,Wall Street, big money, and lobbyist influence. What they are interested in is draining the swamp and building a bigger and better impenetrable GOP controlled swamp. A swamp in which no one, no news organization can look inside, investigate or even question. The only reason I can think of for the GOP rushing this through is that they are all scared to death that investigations into Trump's possible ethical conflicts might uncover some House GOP ethics violations. You never know, when lifting up rocks in the swamp, what you will find underneath.

In the new GOP Controlled world Truth will be what the GOP and Trump says it is. No Debate Allowed.

All hail the Trump and GOP new ethics standard of “truthful hyperbole.”
as the NY Times article Donald Trump’s Deals Rely on Being Creative With the Truthwent on to say :
"Indeed, based on the mountain of court records churned out over the span of Mr. Trump’s career, it is hard to find a project he touched that did not produce allegations of broken promises, blatant lies or outright fraud."

This was another strike against democracy and for G.O.P. self interests.

This is especially troubling given Trump's refusal to release his tax concerns. It is especially troubling considering Trump's many potential ethical conflicts due to his wide ranging business connections. It is especially troubling given recommendation of ethics experts that he should either divest himself of all his businesses or put them into a true blind trust, not some fiction run by his chiidren. Why did they feel they had to rush this through?Could it be that the House GOP Republicans are scared to death that investigations of Trump's ethical conflicts might turn up some House GOP ethical conflict. You never know what you will uncover when lifting up rocks in the swamp and bringing things to light that some people might prerfer to remain hidden.

The first thing that will be banned in the new "ethics free" house by the GOP will be the word ETHICS. In their stealth move the first thing they changed was the name of the committe to remove the word ethics.

Nancy Pelosi released a statement quoted by National Public Radio,
"Republicans claim they want to 'drain the swamp,' but the night before the new Congress gets sworn in, the House GOP has eliminated the only independent ethics oversight of their actions," she wrote. "Evidently, ethics are the first casualty of the new Republican Congress."

The GOP takes another swipe at democracy and another takes another step towards dictatorship. I think all US citizens and politicians, both GOP and Democracy will tell you that one of the things that distinguishes our democracy from dictatorships is that our politicians can be investigated by non partisan independent government agencies.

Read the full New York Times front page article:
Without Warning House GOP Guts Office Reviewing Ethics

And from NPR the News Organization US Citizens voted the most Trustworthy source of News in the US:
House G.O.P. Votes To Strip Independence from Congressional Ethics Office

The NPR Article goes on to say:
"The language approved Monday night, authored by Rep. Bob Goodlatte, R-Va., would prevent staff from making public statements independent of the House Ethics Committee and prevents it from investigating anonymous tips.

So along with banning Ethics the GOP wants to ban free speech.

When I expressed surprise that the GOP would go to these lengths to attack democracy my friend reminded me. He said you know what GOP stands for don't you. It stands for G.uardians O.F P.rivilege

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Wall Street, Gordon Gekko and Stock Market Wisdom

Who wouldn't like to watch a film on Wall Street, especially when it is released after the stock market crash  of 2008 and carries crispy yet apt punches like ‘The mother of all evil is speculation'?

The original and the recent films on ‘Wall Street', directed by Oliver Stone, stirs the concepts behind capitalism and leave some subtle messages behind that spice up the stock market drama even further.

The buzz over the new movie "Wall Street: Money Never Sleeps" has been intense and perhaps, valid as the movie questions the practices of immoral trading that eventually lead to greed and loss of trust in the world of investment.

The movie also talks about conventional wisdom and reformed wisdom, which are perceived as extreme business philosophies, and have their respective believers and followers.

The original ‘Wall Street' movie was released long after the 1980 stock market crash, while the new one is released when the markets are recovering after the 2008 crash.

The worst-ever-seen stock market crash of 2008 was not only a hard-hitting event for the investment world but also a life-changing event for many of those, who were not directly associated with it.

Let's take a quick glance at the story

In both films, Michael Douglas has played an iconic role of Gordon Gekko, who is assumed to be the notorious corporate despoiler. The sequel begins with Gordon Gekko being released from prison as a result of events from the original film. Gekko, on the back of the recent stock market crash, decides to breakdown the hedge fund corruption tactics with the help of his daughter's fiancé, a character of Jacob Moore played by Shia LaBeou.

The story also revolves around Gekko's efforts to spread his influence by giving lectures to students and writing a book on finance. ‘Wall Street: Money Never Sleeps' also portrays the stock market redemption journey effectively and touches upon extremely relevant subjects like upheavals in the housing markets that are strongly connected to the employment crisis.

The role ensured an Oscar for Douglas.

Good or Bad, Greed is Greed!

Gekko's (fictitious) ‘Greed is good' speech is the most interesting part of the film as it brings the factor of ‘trust' in the limelight. Gekko talks about how human it is to be greedy in today's world, where everything is about desiring ‘more'. In fact, Gekko's character is nothing but a representation of a popular culture of white collar crimes that is based on unrestrained greed.

Investors are smart!

Investors believe that it is hard to figure out ‘the trust factor' in the stock market as trading is very subjective and trends can be confusing at times. Moreover, trading is also about sentiments and not just money. And, there are some extremely hard-working people in the stock market that trade with harmless greed and morality.

Investors secretly admire Gekko, who looks impressive but they know that following him blindly may cause them a big loss in the long term.

The iconic quote...

"Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."

Thus, the impact of the actual drama created by the Wall Street movie has been tremendous. Some believe that it is just a movie made for the sake of sensationalizing the stock market events and building Gekko's charismatic character that may appear bigger than the factor of ‘trading ethics' followed by the ‘good guys'.

However, it is also true that the movie offers a cutting-edge perspective on the rise and fall of the stock market. And believe it or not, it shows the Gekkoish face of the stock market, which is real in some cases.

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